We can assist technology startups to raise early stage VC funding from VC funds, Angel Investors, HNWIs and other early stage investors to scale-up business and achieve the targeted valuation on exit.
The ventures which can provide great returns and the ventures where the investor can have a successful “exit “ within the desired time period of investment varying from three to seven years is considered to be an ideal venture capital investment option. Typically we like to support startups that have already achieved a minimum $1m ARR at the current round of funding.
The venture capital investment criteria are based on the potential of the company to grow fast within a limited time period and resources. The startup company which is based on innovative structure and a well-designed business model supported by a strong management team attract venture capitalists.
- The company should be a fast-growing company which has a huge market presence.
- The company should have abundant intellectual property to be able to put a barrier to its competitor’s growth.
- The company should be able to deliver products to make customers repeat customers.
- The company should be able to generate more revenues with limited resources.
- The business should have the potential to attract customers and stay ahead of competitors.
- A scalable business model that will increase profits over time, by growing revenue while avoiding cost increases.
- Great products and services with a competitive edge that is long lasting.
- Demonstrating that the business will target a large, addressable market opportunity
- There should be a clear roadmap towards an IPO or a proper “exit plan” to opt out of investment.
Software, IT, internet technology, artificial intelligence, VR, AR, machine learning, IoT, enterprise SaaS, big data, fintech, insurtech, blockchain, marketing tech, mobile, education, hospitality tech, proptech, B2B, B2C, D2C, healthcare, life science, cleantech, intellectual property, electric mobility , cyber security, consulting, financial services, Cloud -Enabled Services, Outsourcing, Cloud Storage, data security, media, future of work etc.
Our focus is on companies in North America, the UK, Selected European countries, selected Gulf countries and India.
PREFERRED FUNDING STAGES
Late Seed/ First Stage, Expansion Stages- Series A, Series B, Pre-IPO/ Bridge round financing, Acquisition/ Buyout Capital. Typically we like to support startups that have already achieved a minimum $1m ARR at the current round of funding.
DIFFERENT TYPES OF VENTURE CAPITAL
There are three main categories of venture capital financing, each with its own subcategories:
- Early stage
- Acquisition/buyout Financing.
Early-stage financing is also divided into three parts:
- Seed Capital
- Startup Capital
- First Stage Capital
Seed capital is initial funding typically sought by entrepreneurs who are just starting out and don’t have a product of organized business yet. . Seed capital is the funding required to get a new business started. There aren’t many venture capitalists willing to fund at this stage since they aren’t very inclined to invest large amounts of money in an idea that still exists only on paper. This initial funding, which usually comes from the business owner(s) and perhaps friends and family, supports preliminary activities such as creating a sample product, market research, product research and development (R&D), covering administrative cost and business plan development.
It refers to a sum of money (larger than seed capital) given to a startup so it can launch its business, e.g. recruit initial staff, acquire office space and permits, further market research and testing, and finish the development of its product or service. Companies seeking this type of funding already have a sample product available and at least one executive working full-time. Funding at this stage is also rare. It tends to cover recruitment of other key management, additional market research, and finalizing of the product or service for introduction to the marketplace.
Early stage/ First stage Capital
Early stage/ First stage Capital is intended for businesses that have gotten off the ground and have been operating for two to three years, have a management team in place, and their sales are growing. At this point, they are moving toward profitability as they push their products, services, and even advertising to a wider target audience.
Since such startup have spent all their starting capital by now, they need further financing to intensify business activities, enhance productivity and marketing, and/or increase efficiency.
We prefer to provide fund raising service to Early Stage/ First Stage start-ups only. Any stages before that will be on a case to case basis and also as part of the Start-up Advisory Services package.
Expansion financing is divided into three subcategories:
- Expansion Stage/ Second Stage Financing
- Bridge Financing
- Third Stage Financing
Second Stage/Mezzanine Capital
Such capital is provided to well-established firms with a multi-functional team and commercialized product, as well as a reasonable sales momentum under its belt. The purpose is to add the fuel necessary to take the business to the next level.
In other words, VCs that specialize in this type of finances help these businesses begin major expansion, accelerate the growth curve, enter new markets, and/or expand their marketing efforts.
It refers to financing in between full VC rounds with the objective to raise smaller sums of money instead of a full round. Existing investors are usually the ones participating in this type of funding. There are VCs that focus on this end of the business spectrum, specializing in initial public offerings (IPOs), buyouts, or recapitalizations. If you are planning an IPO, a VC may also assist with mezzanine or bridge financing – short-term financing that allows you to pay for the costs associated with going public.
Third/late stage financing
Such financing happens when a startup has reached massive revenue, has a second level of management, and is now seeking funds to grow capacity and working capital, and/or build up marketing efforts even more.
Late stage financing has become popular due to the fact that venture capitalists prefer to invest in ventures with lower failure risk (as opposed to the early stage companies).
3) Acquisition & buyout capital
The last of the venture capital funding types is divided into:
- management/leveraged buyout financing.
Acquisition capital is the provision of the immediate resources used specifically to assist a company in acquiring certain parts of another business or the entire business for itself. Through such a purchase, the smaller company can grow the size of its operations and benefit from the larger scale economies.
Management (MBO) or Leveraged Buyout (LBO) Financing includes a significant amount of money that helps a particular management group to conduct management or leveraged buyouts. Management buyouts provide a preferred exit strategy for companies looking to sell off divisions outside of their core business or for private businesses whose owners plan to retire.
Leveraged buyouts use massive borrowed funds, with the assets of the target company (the one being acquired) regularly used as collateral for the loans. The buyout company may also sell parts of the target firm to pay down the debt. This high-risk, high-reward strategy requires the acquisition to realize high returns and cash flows so that the interest on the debt can be paid.
Dileep K Nair